Bunge lifted its forecast for its 2022 earnings for a second time – but its shares dipped nonetheless, after quarterly results fell short of expectations.
The agricultural trading giant – which in April hiked its forecast for full-year underlying earnings per share by $2.00 to “at least” $11.50 – on Wednesday raised the estimate again, to “at least” $12.00, “with potential upside depending on the market environment”.
Expectations were raised for all three key operating divisions, agribusiness, milling, and refined and specialty oils.
However, Bunge shares traded down 5.5% at $90.12 nonetheless in midday deals in New York, with the group also announcing earnings for the April-to-June quarter which, at an underlying $2.97, came in shy of Wall Street hopes of a $3.26-per-share result.
Revenues, while up 16.5% year on year at $17.93bn, missed estimates of $18.46bn.
On a full-year basis, investors are already expecting earnings of $12.84, according to Refinitiv.
‘Focus on continuous improvement’
Greg Heckman, the Bunge chief executive, remaining upbeat saying that “in the face of significant market shifts, our team successfully delivered another quarter of year-over-year earnings improvement in our core segments.
“Our results reflect the adaptability of our business and strength of our operating model.”
He added that “our focus on continuous improvement across everything we do allows us to be agile and to consistently create value in a variety of market environments”.
Bunge was “confident in our ability to successfully navigate volatility” in markets and to “effectively deploy capital”.
Bunge reported a near-doubling to $214m in adjusted operating profits at its oils division, as both European and North American operations exploited “strong food demand, as well as strong fuel demand in the US”, the group said,
The comments echoed those on Tuesday from rival Archer Daniels Midland, which also highlighted boosts to vegetable oil demand from biodiesel and foodservice groups.
In milling, Bunge’s operating profits tripled, to $109m, “driven by improved margins in North and South America wheat milling”, as well as “effective risk management” of the division’s supply chains.
‘Results were down’
However, adjusted operating profits in the key agribusiness unit eased by 4.2% to $386m, reflecting a 19.6% dip in results in merchandising.
In merchandising, “results were down compared to a particularly strong prior year, as a higher contribution from global grains was more than offset by lower results in ocean freight”.
The downturn more than offset a gain of 10.0% to $230m in operating profits in processing, the other agribusiness unit, “primarily driven by US and Brazil soy crush due to strong meal and oil demand.
“Results in softseed crush were also higher than last year, primarily driven by North America.”